Unsorted FBI Documents

Case l:12-mj-00131-JSS Document 2 Filed 07/11/12 Page 1 of 7

AO 91 (Rev, 01/09) Criminal Complaint

- - _ " ~~ ~ ■ “

United States District Court

for the

Northern District of Iowa

United Suites of America

v.

RUSSELL WASENDGRF, SR.

Defendant

)

)

) Case No. 12-MJ-131

)

)

CRIMINAL COMPLAINT

JUL 1 t 2012

IWTED STATES CHSTRtCT COURT
NORTHERN DISTRICT Of IOWA

[, the complainant in this case, state that the following is true to t he best of my knowledge and belief

On or about the date of 2010-July 2012n the county of Black Hawk

in the Northern

District of

. the defendant violated 18 U. S. C. §1001(a)(1)&{3), an offense described as follows

making and using false statements in a matter within the jurisdiction of the Government of the United States.

I’li is criminal complaint is based on these facts:

See Attached Affidavit

Continued on the attached sheet.

( 'nmphiruint > siumilitre

Willia m La ngdon, Special Agent , FBI

Printed name anti title

Sworn to before me and signed in my presence.

Date: 07/11/2012

Cedar Rapids, IA Jon Stuart S coles, Chief Mag istra te Judge

Printed name and title

Ci tv and slate:

Case l:12-mj-00131-JSS Document 2 Filed 07/11/12 Page 2 of 7

AFFIDAVIT

I, William F. Langdon, being duly sworn states as follows:

1 . I have been a Special Agent (SA) with the Federal Bureau of Investigation (FBI)
for approximately twenty-five years. I am presently assigned to the FBI, Omaha
Field Office. As part of my daily duties as an FBI agent, I investigate criminal
violations with an emphasis on white collar crime and fraud cases including
violations pertaining to wire fraud, in violation of Title 18, United States Code,
Section 1343; mail fraud, in violation of Title 18, United States Code, Section
1341; and Identity Theft, in violation of Title 18, United States Code, Section
1028.

2. This affidavit is made in support of a criminal complaint charging Russell

Wasendorf, Sr. (Wasendorf) with making and using false statements in a matter
within the jurisdiction of the Government of the United States, in violation of Title
18, United States Code, Section 1001(a)(1) & (3).

3. On July 9, 2012, at approximately 8:05 am, law enforcement dispatch for Black

Hawk County, Iowa, received a 911 call regarding a possible suicide attempt at
Peregrine Financial Group, Inc. (PFG), One Peregrine Way, Cedar Falls, Iowa.
Emergency personnel, to include Black Hawk County Sheriffs Deputies, were
dispatched to the location. Upon arrival, emergency personnel found
Wasendorf, Chief Executive Officer and Chairman of the Board of PFG,
unresponsive in his automobile. Inside the vehicle, Black Hawk County Deputy
Sheriff Sergeant Petersen found an apparent suicide note to Wasendorfs wife
and a signed statement detailing fraud committed by Wasendorf through his

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Case l:12-mj-00131-JSS Document 2 Filed 07/11/12 Page 3 of 7

business, PFG, over the past twenty years. PFG is a futures commission
merchant (FCM) registered with and regulated by the United States Commodities
Future Trade Commission (CFTC). FCMs receive money, securities and other
property from their customers to margin, guarantee, or secure the customers'
futures and options trades. FCMs are required by law to segregate and
separately account for all customer funds.

4. At approximately the same time, Russel Wasendorf, Jr. (Russ Jr.), Wasendorfs

son and President and Chief Operating Officer of PFG, arrived at his office
located at One Peregrine Way, Cedar Falls, Iowa, and found an exact copy of
the signed statement along with a suicide note addressed to Russ Jr.

5. In the signed statement found in Wasendorfs vehicle and found by Russ, Jr.,
Wasendorf wrote, in part:

I have committed fraud. For this I feel constant and intense guilt. I am
very remorseful that my greatest transgressions have been to my fellow
man. Through a scheme of using false bank statements I have been able
to embezzle millions of dollars from customer accounts at Peregrine
Financial Group, Inc. The forgeries started nearly twenty years ago and
have gone undetected until now. I was able to conceal my crime of
forgery by being the sole individual with access to the US Bank accounts
held by PFG. No one else in the company ever saw an actual US Bank
statement. The Bank statements were always delivered directly to me
when they arrived in the mail. I made counterfeit statements within a few
hours of receiving the actual statements and gave the forgeries to the
accounting department.

6. Later in the signed statement, Wasendorf wrote, in part:

I had no access to additional capital and I was forced into a difficult

decision: Should I go out of business or cheat? I guess my ego was too
big to admit failure. So I cheated, I falsified the very core of the financial
documents of PFG, the Bank Statements. At first I had to make forgeries
of both the Firstar Bank Statements and the Harris Bank Statements.
When I choose [sic] to close the Harris Account I only had to falsify the

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Case l:12-mj-00131-JSS Document 2 Filed 07/11/12 Page 4 of 7

Firstar statements [elsewhere in the signed statement Wasendorf noted
that Firstar “eventually became US Bank”]. I also made forgeries of
official letters and correspondence from the bank, as well as transaction
confirmation statements.

Using a combination of Photo Shop, Excel, scanners, and both laser and
ink jet printers I was able to make very convincing forgeries of nearing
every document that came from the Bank. I could create forgeries very
quickly so no one suspected that my forgeries were not the real thing that
had just arrived in the mail.

With careful concealment and blunt authority I was able to hide my fraud
from others at PFG. PFG grew out of a one man shop, a business I
started in the basement of my home. As I added people to the company
everyone knew I was the guy in charge. If anyone questioned my
authority I would simply point out that I was the sole shareholder. I
established rules and procedures as each new situation arose. I ordered
that US Bank statement were to be delivered directly to me unopened, to
make sure no one was able to examine an actual US Bank Statement. I
was also the only person with online access to PFG’s account using US
Bank's online portal. On US Bank side, I told representatives at the Bank
that I was the only person they should interface with at PFG.

When it became a common practice for Certified Auditors and the Field
Auditors of the Regulators to mail Balance Confirmation Forms to Banks
and other entities holding customer funds I opened a post office box. The
box was originally in the name of Firstar Bank but was eventually changed
to US Bank. I put the address “PO Box 706, Cedar Falls, IA 50613-0030"
on the counterfeit Bank Statements. When the auditors mailed
Confirmation Forms to the Bank's false address, I would intercept the
Form, type in the amount I needed to show, forge a Bank Officer's
signature and mail it back to the Regulator or Certified Auditor.

When online Banking became prevalent I learned how to falsify online
Bank Statements and the Regulators accepted them without question.

7. On July 9, 2012, Russ Jr. reported to law enforcement that, to determine if
Wasendorf s statements in the signed statement were accurate, Russ, Jr.
obtained a purported bank statement for PFG’s US Bank account ending in 845,
titled "Customer Segregated Acct," for the month ending December 31, 201 1 .
Russ Jr. obtained the purported statement from PFG’s accounting department.

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The ending balance on the purported bank statement was $221 ,770,946.18.
Subsequently, Russ, Jr. obtained the bank statement for the same period directly
from US Bank personnel. The bank statement obtained from US Bank
personnel indicated an ending balance as of December 31, 201 1 of
$6,337,628.14.

8. In an interview with law enforcement on July 9, 2012, the Chief Financial Officer

of PFG verified she used the purported bank statement from PFG's accounting
department indicating a balance of $221,770,946.18 as of December 31, 2011
when she prepared PFG's year end financial statement. This financial
statement, reflecting an inflated amount of customer segregated funds, was sent
to PFG's regulators to include the CFTC.

9. The CFTC is an independent federal regulatory agency charged by Congress
with the responsibility for administering and enforcing the provisions of the
Commodity Exchange Act, 7 U.S.C. §§ 1 et seq. (2006), as amended, and the
Regulations promulgated thereunder, 17 C.F.R. §§ 1.1 et seq. (2012). The
National Futures Association (NFA) is a not-for-profit industry membership
corporation, formed as a registered futures association authorized under 7
U.S.C. § 21, that operates under the supervision of the CFTC. The NFA is
responsible, under CFTC oversight, for certain aspects of the regulation of
futures entities. In 2010 and 2012, the NFA was PFG’s designated
self-regulatory organization responsible for monitoring and auditing PFG for
compliance with the minimum financial and related reporting requirements of the
domestic exchanges of which PFG was a member.

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Case l:12-mj-00131-JSS Document 2 Filed 07/11/12 Page 6 of 7

10. In an interview with law enforcement on July 10, 2012, a PFG employee whose

responsibilities included reconciling PFG’s customer segregated funds confirmed
that she used the US Bank customer segregated account balances as reflected
in PFG’s internal accounting system in calculating the amount of PFG’s customer
segregated funds for regulatory purposes.

1 1 . PFG customer segregated account verification records in possession of the NFA
(and obtained from the CFTC) include falsified US Bank statements and
corresponding account confirmation forms purporting to be for PFG’s US Bank
account ending in 845 (PFG’s customer segregated account). The falsified US
Bank statements and corresponding account confirmation forms list US Bank's
address as "P.O. Box 706, Cedar Falls, IA 50613-0030." One such US Bank
statement is for the period ending February 28, 2010 and reports a total balance
of $207,260,962.28 in the account. A corresponding account confirmation form
reports the same balance and bears a purported signature of an authorized
representative of US Bank. Another such US Bank statement is for the period
ending March 31, 2011 and reports a total balance of $218,650,550.98 in the
account. A corresponding account confirmation form reports the same balance
and bears a purported signature of an authorized representative of US Bank.
According to the CFTC, the records were sent to the NFA. Law enforcement has
obtained copies of actual statements for PFG’s US Bank account ending in 845
for the time periods including February 28, 2010, and March 31, 2011.

According to the actual statements from US Bank, on February 28, 2010, the
account held a total of $9,171,177.08, and on March 31, 2011, the account held

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Case l:12-mj-00131-JSS Document 2 Filed 07/11/12 Page 7 of 7

a total of $7,181,336.36.

12. According to the US Postal Inspection Service, Post Office Box 706 in Cedar
Falls, Iowa, was opened by Wasendorf on October 11, 2006, and has remained
under his control since that time. Wasendorf presented his driver’s licence and a
vehicle registration renewal form bearing his name in order to open the Post
Office Box. While in control of the Post Office Box, Wasendorf added “U S.

Bank Fund LLC, as an addressee receiving mail at the Post Office Box.

13. During the afternoon of July 9, 2012, Wasendorf was interviewed by law
enforcement at the University of Iowa Hospital in Iowa City, Iowa. Wasendorf
acknowledged that he wrote the signed statement using a computer at his
residence and that the information contained in the statement was true.
Wasendorf estimated the amount of loss due to his fraud exceeded SI 00 million.

14. Based on the above information, there is probable cause to believe that Russell
Wasendorf, Sr. committed the crime of making and using false statements in a
matter under the jurisdiction of the Government of the United States, in violation
of Title 18, United States Code, Section 1001(a)(1) & (3).

William F. Langdon
Special Agent, FBI

4l

Subscribed and sworn to before me this date of ; /2i ■ 2012.

JON STUART SCOLES
CHIEF MAGISTRATE JUDGE
UNITED STATES DISTRICT COURT

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